TAIPEI (Taiwan News) — Germany-based Merck has opened a new semiconductor materials facility in Kaohsiung, a move analysts say will strengthen Taiwan’s back-end semiconductor supply chain, CTEE reported Wednesday.
The materials supplier invested NT$18.4 billion (US$586 million) in the site, which covers about 150,000 square meters. It marks the company’s largest semiconductor materials campus worldwide, as global demand grows for advanced chips used in artificial intelligence and high-performance computing, according to Merck.
The facility enables local production and supply of thin-film materials, specialty gases, and formulation chemicals. These materials are mainly used in the back end of chip production, where chips are packaged and tested before being shipped to customers.
Industry analysts view major Taiwanese outsourced semiconductor assembly and test (OSAT) firms, including Advanced Semiconductor Engineering, Powertech Technology, and King Yuan Electronics, as among the most direct beneficiaries. By sourcing materials locally, these companies can expect more reliable supplies and faster deliveries, helping them better meet customer demand.
Merck’s Kaohsiung site, located about 300 meters from its existing facility, will manufacture high-purity materials used in advanced logic and memory chips, as well as next-generation packaging technologies.
As AI-related chips become more complex, packaging methods such as chip-on-wafer-on-substrate, fan-out, and 2.5D/3D integration are becoming increasingly important. OSAT providers are therefore seeking partners capable of co-development and rapid pilot production, rather than standalone materials supply.
Market analysts noted that Merck’s investment goes beyond expanding a single factory. It reflects a broader shift toward shortening and localizing Taiwan’s semiconductor supply chain, improving reliability, and making production schedules more predictable.
The investment is also expected to support related Taiwanese suppliers that provide equipment and components for semiconductor manufacturing, such as Gudeng Precision Industrial, Trusval Technology, and Rayzher Industrial. Analysts say closer access to materials allows these firms to better coordinate system upgrades and installations.
Industry observers added that material supply risks have historically outweighed capacity risks in Taiwan’s back-end semiconductor sector. With local production now coming online, Taiwan’s semiconductor supply chain is expected to become more resilient and competitive over the long term.
